Reliance on Tuition Revenues Increasing

Net tuition and fees grew from 16 to 22 percent of total revenue at public colleges and universities, and from 29 to 40 percent at nonprofit institutions, between FY1999 and FY2009, according to a recent Government Accountability Office report (GAO-12-179). The GAO examined revenue and expenditure trends, faculty and staff compensation, and student outcomes at colleges and universities. They also studied required consumer disclosures that institutions must make under the Higher Education Act. The report primarily drew from national data from the National Center for Education Statistics, along with field visits to a small number of institutions. The analysis, requested by Senator Enzi (R-WY), ranking member of the Health, Education, Labor and Pensions Committee, focuses only on public and nonprofit colleges and universities. Several other recent GAO reports have examined for-profit schools.

Other key findings include the following.

Government and Other Revenue. The share of revenue provided by state and local governments decreased at public colleges and universities from 34 percent to 28 percent. All types of schools also saw a decrease in other sources of revenue, such as donations and income from endowment. Other revenue dropped most at nonprofit institutions (which rely on it more heavily), going from 61 percent in FY99 to 46 percent in FY09. (Investment returns were excluded from the FY09 numbers because some sectors had negative returns and the returns included both realized and unrealized losses.)

Federal Student Aid. Revenues from Pell grants increased by 42 percent at public institutions and 24 percent at private institutions over the 10-year period. However, revenue from other federal grants to students increased at publics by 25 percent but decreased by 20 percent at nonprofit institutions.Revenue from federal loans saw more dramatic increases, going up 134 percent at public institutions and 138 percent at nonprofits, with most of the increase attributable to loans to parents of undergraduates.

Instructional Expenses. Instructional spending, the largest category of expenditures, went up on a per-student basis at some types of public institutions (by almost $1000 per student at research universities), but decreased slightly at community colleges and significantly (29 percent) at specialty institutions. Most types of private nonprofit institutions kept instructional costs fairly level on a per-student basis over the ten year period, except for research universities, where such spending dropped from $16,743 per student to $14,416.